American Airlines Parent AMR Files Bankruptcy; Horton Is CEO
American Airlines parent AMR Corp. filed for bankruptcy after failing to secure cost-cutting labor agreements and sitting out a round of mergers that dropped it from the world’s largest airline to No. 3 in the U.S.

With the filing, American became the last of the so-called U.S. legacy airlines to seek court protection from creditors. The Fort Worth, Texas-based company, which traces its roots to 1920s air-mail operations in the Midwest, listed $24.7 billion in assets and $29.6 billion in debt in Chapter 11 papers filed yesterday in U.S. Bankruptcy Court in Manhattan.

“It’s painful but probably necessary,” John Strickland, an aviation analyst at JLS Consulting in London, said in a telephone interview. “They will have to go through the whole process that their peers have gone through.”

Job and flight reductions are likely in the future as AMR seeks to trim expenses and leave bankruptcy in less than 15 months, Chairman and Chief Executive Officer Tom Horton said yesterday. Normal flight schedules will continue on American and its American Eagle regional unit for now, along with the airline’s frequent-flier program, the company said. A spinoff of American Eagle, which already had been delayed from this year into 2012, is on hold, Horton said.

American’s cost structure compared with other airlines had become “untenable,” said Harvey Miller, the company’s bankruptcy lawyer, at a court hearing yesterday in Manhattan. The airline “fought ferociously” to avoid filing for bankruptcy, and now planned to use the court process to turn around its business to become a profitable global airline, Miller said.

At the hearing, U.S. Bankruptcy Judge Sean Lane approved American’s requests to pay employees, continue its customer programs, and pay what the company said are vendors that are critical to maintaining its operations.

American said in court papers that it needed permission to pay $50 million in claims from critical vendors. Miller said the company will later request approval to pay an additional $35 million in claims.

“We are talking about an emergency and the survival of this company,” Miller said about the request. “We have to operate this airline and assure customers that when they book on American, that flight is going to be there and that flight is going to depart on time.”

Horton, 50, most recently AMR’s president, replaced Gerard Arpey yesterday as chairman and CEO. Arpey, 53, opted to retire after the board asked him to stay, Horton said. Arpey will join Emerald Creek Group LLC, a private-equity firm founded by former Continental Airlines Inc. CEO Larry Kellner, on Dec. 1, the firm said in a statement.

Arpey supported the bankruptcy filing, Horton said. Arpey decided to leave after concluding that AMR would be better served with new leadership “because it was going in a different direction,” Tom Roberts, an attorney at Weil, Gotshal & Manges LLP who represents AMR, said in a telephone interview. “It was his decision because he had been the one that had been leading the charge for so many years to avoid bankruptcy.”

AMR doesn’t plan to seek so-called debtor-in-possession financing to fund operations during bankruptcy, Horton said at a news conference at Dallas/Fort Worth International Airport.

AMR’s board voted unanimously Monday night to file for bankruptcy after considering options for months, Horton said. AMR was determined to avoid Chapter 11 as air travel fell and losses mounted after the 2001 terrorist attacks, even as peers used bankruptcy to shed costly pension and retiree benefit plans and restructure debt. Rival carriers later combined, giving them larger route networks that were more attractive to lucrative corporate travel customers.

ADP Says U.S. Companies Added 206,000 Workers in November
Companies added more workers than anticipated in November, easing concern the job market is stagnating in the third year of the U.S. recovery, according to a private report based on payrolls.

The 206,000 increase was the biggest this year and followed a revised 130,000 gain the prior month, Roseland, New Jersey- based ADP Employer Services said today. The median forecast of economists surveyed by Bloomberg News called for an advance of 130,000.

A pickup in hiring will make it easier to sustain the recent gain in consumer spending, which accounts for about 70 percent of the economy. Overall payrolls rose by 122,000, still not enough to cut the jobless rate from 9 percent, economists in a Bloomberg survey projected ahead of a Labor Department report due in two days.

“Things are getting better for the economy,” said Robert Brusca, chief economist at Fact & Opinion Economics in New York, who projected a gain of 160,000. “It means the news we have on Christmas shopping and on an increase in consumer confidence may have some validity.”

Last month’s initial ADP figures showed a 110,000 gain, while the Labor Department’s data two days later showed an increase of 104,000 in private payrolls for October.

The projections for November ranged from 95,000 to 200,000, based on the estimates of 44 economists surveyed by Bloomberg.

Goods-producing industries, which include manufacturers and construction companies, had an increase of 28,000 workers, today’s figures showed. Employment in construction rose by 16,000, the most since November 2006, while factories added 7,000 jobs.

Service providers took on 178,000 workers.

Companies employing more than 499 workers added 12,000 jobs. Medium-sized businesses, with 50 to 499 employees, took on 84,000 workers and small companies increased payrolls by 110,000, ADP said.

Another report today showed employers announced fewer job cuts this month, according to figures from Chicago-based Challenger, Gray & Christmas Inc. Job-cut announcements dropped 13 percent in November from the same month in 2010.

Economic growth in the U.S. and other advanced economies “has been proceeding too slowly to provide jobs for millions of unemployed people,” Federal Reserve Vice Chairman Janet Yellen said in a speech at a San Francisco Fed conference yesterday. She called for “urgent” international action to combat a “dearth” of global demand.

Yellen said the central bank has leeway to spur the U.S. recovery and reduce unemployment by buying more assets or clarifying its plan to sustain record-low borrowing costs.

Fed officials have differed this month over whether additional stimulus may be needed to reduce unemployment more quickly. Policy makers next meet Dec. 13 in Washington.

Macy’s Inc., betting consumer spending will be sustained during the November-December holiday shopping season, was among companies that added staff. The second-biggest U.S. department- store chain said it was stepping up hiring of mostly part-time employees by 4 percent for the period.

Earnings growth is allowing some businesses to hire. Williams-Sonoma Inc., a retailer of high-end home goods, raised its annual profit forecast and will “continue to look for a few key jobs” in online sales, Chief Executive Officer Laura Alber said in a Nov. 17 conference call with analysts.

Companies remaining cautious include DirecTV, the largest U.S. satellite-TV provider, which this month said it will cut back on spending in 2012 to prepare for any slowdown in the economy.

The Labor Department’s report, to be released on Dec. 2, may show private payrolls rose by 146,000 in November, according to the Bloomberg survey median. Overall hiring, which includes government jobs, may have climbed after rising 80,000.

The ADP report is based on data from about 337,000 businesses with more than 21 million workers on payrolls. Macroeconomic Advisers LLC in St. Louis produces the data with ADP.

Andrew Harrer/Bloomberg NewsYahoo could be taken over.

Silver Lake Group Said to Bid $16.60 a Share for Yahoo Stake
A group of investors led by private- equity firm Silver Lake offered to buy a minority stake in Yahoo! Inc. for about $16.60 a share, according to people with knowledge of the matter.

Silver Lake, working with Microsoft Corp., venture-capital firm Andreessen Horowitz and Canada Pension Plan Investment Board, offered to buy convertible preferred securities equal to a 10 percent to 15 percent stake for as much as $3 billion, said one of the people, who asked not to be identified because the bids made this week are private. The price was lower than an offer made by private-equity firm TPG Capital, two people said.

Silver Lake’s bid values Sunnyvale, California-based Yahoo at $20.6 billion, about 6 percent higher than its market value at yesterday’s close. Under Silver Lake’s proposal, Yahoo would be able to distribute at least $5 billion to shareholders in the form of a special dividend or a share buyback, said the person. Yahoo, exploring strategic options after ousting Chief Executive Officer Carol Bartz, aims to wrap up the deal by the end of the year, people said.

“The offer is disappointing,” said Hamilton Faber, an analyst at Atlantic Equities LLP in London with a “neutral” rating on Yahoo shares. “Investors who’ve been buying Yahoo recently were hoping for a significant premium and a takeout of the full company, and this falls short on both counts.”

Yahoo directors are likely to discuss offers at a board meeting scheduled for today, one person said. Alibaba Group Holding Ltd., aiming to buy back the stake in itself owned by Yahoo, is monitoring the situation and may still enter the bidding, one person said.

Yahoo gained 1 cent to $15.71 at the close in New York. The shares have declined 5.5 percent this year.

While Microsoft failed in 2008 to acquire all of Yahoo, it aims to use a minority holding to safeguard its 10-year Web search agreement with the company.

Microsoft, based in Redmond, Washington, forged the partnership under Bartz to provide search technology to Yahoo sites. The deal was aimed at helping both companies vie with Google, the leader in U.S. search-related advertising.

Cantor Plans to Hire 200 Next Year as Layoffs Ravage Wall Street
Cantor Fitzgerald & Co. plans to add at least 200 people next year in an expansion that defies a wave of layoffs at the investment bank’s competitors.

“There are unbelievable opportunities as the financial industry is deleveraging from the very large debt and real estate bubbles,” Chief Executive Officer Shawn Matthews said in a telephone interview.

The firm expanded 20 percent this year, boosting headcount in areas including credit trading, leveraged loans and fixed- income sales by more than 200. Wall Street banks are firing staff after a combined 41 percent decline in investment-banking revenue in the third quarter at JPMorgan Chase & Co., Bank of America Corp., Citigroup, Goldman Sachs Group Inc. and Morgan Stanley. The cull has claimed 200,000 jobs this year.

“We are looking to build out our sales and trading businesses in both debt and equity,” said Matthews, who is based in New York. “There are a lot of qualified people looking for an alternative to the traditional financial services model that has made many banks act more like massive hedge funds.”

U.S. lawmakers passed the Volcker rule last year as part of the Dodd-Frank Act to restrict banks from making bets with shareholder money. In Europe, banks are unloading real-estate and infrastructure loans to meet regulators’ requirement for a 9 percent core capital ratio earlier than planned. Lenders have pledged to cut assets by more than $1 trillion within two years.

The capital rules, designed to prevent a rerun of the 2008 financial crisis, are being adopted as banks struggle to contain losses on sovereign debt that dim the prospect of an economic recovery. The Organization for Economic Cooperation and Development cut its 2012 global growth forecast to 1.6 percent from 2.8 percent on Nov. 28.

“The European Union will have a hard time to remain intact,” Matthews said. “A few countries will need to drop out of the EU for it to be long-term viable. The repercussions of this will affect us for at least a decade.”

The firm, majority owned by its staff, is interested in “bolt-on” acquisitions from banks looking to reduce their overseas and non-core businesses, Matthews said.

“We haven’t seen significant sales yet as people are still trying to work out where we stand in the macro environment,” he said. “Banks will start selling a lot more assets next year, including some of their units.”

Cantor Fitzgerald lost 658 of its 960 New York staff in the Sept. 11 terrorist attack. It now employees about 1,400 people worldwide.

The firm, founded in 1945 by Bernie Cantor and John Fitzgerald, hired David Pichler this month in New York from Gleacher & Co. as co-head of credit fixed-income. Jason King and Jason Caamano joined from UBS AG in June as managing directors for the risk arbitrage and relative value team.